Businesses “watching in horror” as no-deal Brexit risk rises

As the government ramps up its planning for a “no-deal” brexit the UK’s five leading business groups have issued a strongly worded joint statement imploring politicians to avoid such a scenario.

The CBI, EEF, Institute of Directors, Federation of Small Businesss and the British Chambers of Commerce – which between them represent hundreds of thousands of firms across the UK – claim that businesses have been “watching in horror” as politicians have focused on internal disputes rather than the practical steps that are required to protect the economy.

The group warns that whilst many companies are actively preparing for a ‘no deal’ scenario, they are doing so at considerable cost. Meanwhile there are, they claim, hundreds of thousands who have yet to start planning.

The statement adds that firms are pausing or diverting investment that should be boosting productivity, innovation, jobs and pay into stockpiling goods or materials, diverting cross border trade and moving offices, factories and therefore jobs and tax revenues out of the UK

“With just 100 days to go, the suggestion that ‘no-deal’ can be ‘managed’ is not a credible proposition,” it reads. “Businesses would face massive new customs costs and tariffs. Disruption at ports could destroy carefully built supply chains. From broadcasters, to insurance brokers, to our financial services – the UK’s world-leading services sector will be needlessly disadvantaged, and many professional qualifications will be unrecognised across the EU.”

“The responsibility to find a way forward now rests directly with 650 MPs in Parliament,” it continues. “Nobody wants to prolong the uncertainty, but everyone must remember that businesses and communities need time to adapt to future changes. As the UK’s leading business groups, we are asking MPs from all parties to return to their constituencies over Christmas and talk to their local business communities. We hope that they will listen and remember that when they return to Parliament, the future course of our economy will be in their hands.”

The message has been echoed by a number of other business groups, including the Manufacturing Technologies Association (MTA) which represents UK suppliers of manufacturing technology equipment. “All of our members have either international suppliers or international customers, frequently both, and they need the confidence that they will be able to work with them on a secure basis in the future, said the organisation’s CEO James Selka. “Politicians of all persuasions need to think very hard about businesses and jobs in their constituencies that will be at risk from the recklessness of No Deal.”

“Leaving without a deal would be catastrophic,” commented SMMT chief executive Mike Hawes, “plants will close, jobs will be lost. We need a deal now, and we need an ambitious deal for the future that guarantees frictionless trade with our most important market – nothing else will do, and we urge all parties to remember what’s at stake.”

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If the so called politicians concentrated on their day job instead of bitterly fighting between each other we may have had a deal by now but instead they just want to continue the infighting to improve their own personal positions. Absolute disgrace.

“The latest flurry of warnings follows a similar statement last month from car industry trade-body SMMT, which published a survey revealing that three quarters of UK automotive firms fear that a ‘no-deal’ Brexit will threaten their future viability”

Not the SMMT again ! – This survey was not of UK automotive firms – it was of their membership – many of whom are nothing more than sales offices for foreign companies selling into the UK – I am not particularly concerned about their viability in the UK. I appreciate that the figures probably include UK manufacturers, who’s views should be important to us.

This situation has been blindingly obvious since well before July 2016 for those who chose to think about it, instead of being bulldozed by ‘Project Immigrant Fear’ to vote to leave..
Due to the stubbornness of this Govt., who choose to ignore the effects of Brexit on the nuts and bolts of business,Standards & Regulations, logistics and travel we are all headed for the Unknown, still, as we were before the Referendum. How could Companies plan for Brexit when absolutely no-one knew at the time or since what it will look like. What confidence can we have in this Government to get us on an even keel if they couldn’t do it in over 2 years?
Tezza May’s call for ‘unity in the UK’ is bound to fall on deaf ears when 16.1M voters didn’t want to leave at all? Like the Black Knight in ‘The Holy Grail’, it’s ” only a flesh wound “.

It is staggering that the Government can spend £billions pursuing a course of action designed to make the UK poorer. I thought there was a shortage of cash?

Meanwhile, the impact on advanced manufacturing will be extreme. Car makers for example could manage a Brexit with free trade and frictionless borders (which may not be achieved by May’s deal), but the threat of no deal will see investment plummet immediately, which will make a recession next year likely.

And all this to keep 100 backbenchers happy over Christmas. It’s fairly likely that Parliament will outlaw “no deal” in January. But “fairly likely” isn’t good enough for major business investment.

I was starting and expanding businesses before we joined the EU.
I now sell to many countries inside and outside the EU. If you make a product or provide a service the world wants to buy, no problem.
roll on freedom.

My company have been exporting well over half of turn-over for over 40 years. While we import about 20% from the EU (mainly because UK manufacturers have stopped making many of the items that we need) we do not export to the EU. The rest of the world is less protectionist than the EU and has a greater regard for British business and products. Only the very large, transnationals trade successfully in the EU. The Trade Balance deteriorates annually as a proof of the imbalance!

Iain
We should have started our negotiations with a WTO exit from the EU as the foundation, then watch the EU struggle to get a deal that suits them. Why did we give away the high ground?

Because we were, and still are down in the swamp with all the other ethno-nationalists. There’s no high ground for isolationist and protectionist standpoints. We are sacrificing everything we hold dear for the stupidity of suppressing free movement at the behest of the rabid right.

My initial thoughts about the delayed vote on the proposed EU offer were negative. On reflection however this might be a good move. Firstly our EU counterparts are being forced to publish their own contingency plans for a no deal. This means that we know what is going to happen.

Secondly, by publishing they dispel much of the panic created by project fear. Yes the flights will continue.

Thirdly, EU countries are now compelled to consider their own losses in the event of Brexit and they can no longer continue to cling to a position of denial for what they might consider to be an irrational decision by the UK electorate to leave the EU.

For example Ireland exports £5 billion of Beef and Pork to the UK annually. The UK has just agreed today that there will not be any additional veterinary checks on Irish meat provided this gesture is reciprocated by the EU. It is a gentle way of saying that should the EU respond with a hostile approach then UK might be compelled to wipe out Irish Livestock farming. UK exports account for 85% of Irish beef production and 50% of their pork production. The Irish simply wont find substitute markets for their Beef and Pork, however the UK can easily find substitute suppliers.

We have a number of longstanding accords with the Irish, as good neighbours should. None were negotiated by the EU. This gives us some sense of what a no deal is. It is a series of friendly accords with individual nations, rather than necessarily some overarching agreement with the EU.

The same goes for the French. If they want to be silly about blocking UK exports by bureaucratic means then we’ll route the traffic through Belgium and The Netherlands. The French might be ideologically attached to grand schemes such as the EU and the Maginot line but they should also be aware by now that these grand scheme can also be circumvented.

Time kills all deals. With time the EU’s position is looking weaker and Varadker’s position on the backstop, particularly now he has published his contingency plans for a no deal scenario look rather like a busted flush.

Furthermore we still hold two ace cards; Firstly, our currency- In a no deal scenario the pound is likely to fall further and would most likely offset any tariff applied by the EU – this would also boost our sales to non EU countries.

Secondly, we may opt to declare a zero tariff for the EU as a negotiating ploy to encourage the EU to reciprocate in the same way we have offered Irish livestock farmers an olive branch on boarder checks.

If the EU don’t reciprocate then they will be damaging their own exporters by driving the UK to substitute its supply, either with UK suppliers or with other non EU suppliers.

Right now we are playing a very high stakes game of chicken with the EU. Our politicians might well be acting like idiots- but this whole farrago could still play out in our favour despite what those in Westminster say or do rather than because of it.

It’s impossible to predict exactly what will happen if (increasingly unlikely) a no deal scenario is allowed to play out, but I like what Desmond is thinking. The remain side (and I include parliment in that) in conjunction with business are determined to scare the population in to seeing the error in their ways. Ivan Rogers the former EU Ambassador has called this ‘Revolutionary Defeatism’ by anti Brexiters. IMO business do not get a vote so should not have this disproportional influence on what is an issue around politics and democracy. Why does the Engineer not have Pro-Brexit business people such as former director of the British Chambers of Commerce John Longworth or John Mills (of JML fame) make their case?

Personally, I feel that this headline illustrates some of the problems with UK Industry/Business.
As per Business 101, I would have expected all UK businesses to start contingency planning straight after the referendum, and at this late stage I would expect all businesses to have fully formed plans covering all eventualities – including ‘no deal’.
I wouldn’t expect any business contingency plan for Brexit to be “wait and see what the govenment tells us to do” ! Relying on government and/or MPs to tell you how to run your business is utter madness.
If you haven’t planned adequately, you can hardly blame Brexit or the Government if your business fails.

If the so called politicians concentrated on their day job instead of bitterly fighting between each other

But bitterly (and stupidly) fighting each other is what is an adversarial based society does:
Each dispute between citizen, corporation, the state itself makes work for 5 sets of clerks?
(I read somewhere that HMG has taken on 6,000 extra lawyers already to deal with this) and please tell me one occasion in the past 2,000 years where these ‘leeches on the jugular of innovation’ have created one penny piece of value added?